Using the Web and social media to sell real estate

Commercial real estate short sales are a very complex process that is very different from the conventional short sale that we know from in the residential market.

Commercial short sales are much more complex than residential short sales.

First of all you are dealing with a very different type of bank, usually a local bank, who has very tight control on the loan it services and who also undergoes a tremendous quantity of scrutiny from the government.

These banks need to maintain certain performances and certain capital reserves and non performing loans are a definite threat to their survival. So the first thing they will do is trying to control the property before the foreclosure is through. A much more aggressive process.

Roberto Mazzoni

The United State real estate market offers right now the best appreciation and stability potential world wide. This is the shared opinion of many international investors who join together into an association that takes care of representing their trade, information and political needs inside of the US. Its name is Association of Foreign Investors in Real Estate and brings together 180 other organizations in 21 separate countries.

AFIRE (afire.org) has its headquarters in Washington DC, very close to the source of all political and legislative decision in the United States and has the first and foremost purpose of deliver timely and precise information on any new law or tax regulation that could affect international investors so that they stay abreast of the change and can be competitive with domestic investors.

The United States offer the most stable and secure real estate market for international investors.

Every year, AFIRE conducts a survey among its members to establish which international real estate market offers the most stability and security and which has the highest appreciation potential. The latest survey published at the beginning of 2010 shows that the United States still offer the most stable and secure investment environment.

The closest competitive nation is Germany that ranks about half and then we have Canada, France, Australia and the UK.

The Unites States real estate market offer the highest appreciation potential world wide according to AFIRE members..

The United States also offer the best appreciation potential even when compared to growing economies like China and Brasil or to established economies like the UK, Germany and Canada.

The perception of potential appreciation in the US has been increasing steadily in the last four years.

Considering the historically low prices of real estate, the United States have been increasing their perceived appreciation potential constantly in the last four years and today most of properties can be bought well below their replacement value, which means they are undervalued due to the presence of a high number of foreclosures, but have the potential of going back to their correct values once banks will have depleted their reserves of repossessed properties.

Who comes today to the United States can find investment properties that produce a net income that can be more than double of what could be obtained in Europe for a comparable investment or can find a quality vacation home well below market value and in very nice locations.

Roberto Mazzoni

Concentrated as we are in selling a specific house or “making a deal” in our own market, we easily lose sight of the major factors that can make all the difference between fighting every day for a result and growing an healthy real estate business. Real estate is local by definition and therefore you need to know your backyard well or you need to have means to cover multiple markets by serving a specific type of client. In the last couple of days I have met a Realtor who is specialized in dealing with customers from Australia and who has managed with his firm to close one deal a day in the last few weeks and there seems no end in the supply of cash he is getting from overseas.

Capital flow is a key factor in US real estate right now.

He did a very good work in creating the relationship of course and is very diligent in procuring the types of properties that his clients ask from him, but would you like to be in his same position? Well you need to be familiar with the global forces that impact your local market and that can dictate whether you should stay there or change market altogether.

The first and foremost of this force is called “capital flow” and it is intimately connected with international real estate. Capital flow is not only currency exchange and the transferring of cash from one nation to another in order to buy goods, it can also involve the transfer of assets, capital goods (machinery or goods used in producing something else), debt and credit.

Therefore we see India, that has been receiving a very strong flow of capital from the US for outsourcing activities, that is now sending some of this cash back to the US purchasing cash flow producing properties at a discount price. We also see international investors purchasing notes (debt) or Canadian investors leveraging credit in their own country, that gives loans at only 2.5 % of interest, and use it to buy cash deals in the US.

North American real estate is for sale and somebody is definitely going to buy it at very discounted prices as a long or short term investment using strong currencies or even better weak currencies that get converted into dollars.

According to a research published by the Association of Foreign Investors in Real Estate, the United States are the country that today offers the most stable and secure real estate investment environment:

http://www.afire.org/foreign_data/2009/3.shtm

Of course you must know what you are doing otherwise you will still lose money, and that’s why you should combine your local market or multi-market knowledge with attention to capital flow forces around you to become the specialist that is able to direct them and profit from them.

Roberto Mazzoni

Today I have begun my formal training as a CIPS (Certified International Property Specialist) which is the official US designation for Realtor that are specialized in dealing with transactions that involve foreigners and that can also involve properties abroad. There area about two thousand professionals with the CIPS designation throughout the world and therefore I am getting ready to join a very selected group.

One of the first key elements that I have discovered and that I want to share with you is the importance of the Corruption Perception Index is securing the trust of your potential buyer or investor. It evaluates the desirability of a whole nation as an investment platform so it is obviously the first thing the potential investor would consider before even deciding on which property to invest.

As a matter of fact, the first hurdle I have to overcome when talking to my Italian investors is convincing them that the US is a safe place for their money and that they will be able to get their profit back once the project is completed successfully or that they will be able to continue to enjoy the property they have bought for long time to come.

But now I have a new tool that I can use: the Corruption Perceptions Index calculated and published by Transparency International, a non profit organization located in Berlin that calculates every year a sort “transparency vote” for 180 nations, combining different factors like the behavior of government, the ease to conduct business or transactions, the availability of public information and so on.

The United States are classified at position 19 with a 7.5 score, as compared to New Zealand that scores at the top with 9.4 and Somalia with 1.1 at the very bottom. The vast majority of countries score below 5, like for example Italy is placed at position 63 with a score of 4.3. The UK and Germany are respectively at position 17 and 14.

The strength of the US is that it provides a very solid protection on property rights and often very transparent information on past transactions and the market and the overall perception is improving since it has climbed one position since 2006: from 20 to 19, despite the real estate bubble.

So this index can be used effectively to enlighten investors who maybe are thinking in putting their money in some other emerging markets or that reluctant in crossing the ocean.

Roberto Mazzoni

In a previous article I have already reported that Llenrock Group counts on international real estate funds to come to the rescue and this might very well be the case (see “International Investors Coming to Rescue the US”). But what does this mean to you? If so many banks collapse all at the same time, many businesses will also go due to the lack of financing to support them and the market will spiral further.

Small community banks are at risk due to the coming commercial foreclosure wave.

And the main problem won’t be with the big office buildings, but rather with the small office and apartment buildings or the small strip malls. So we need to facilitate a solution by directing any small commercial property owner that is facing foreclosure, and they are going to be many, to the right sources to solve their situations in an orderly and timely fashion.

This might include loan modification, short sale or partnering with a domestic or an international real estate investor who can help them get refinanced and survive, in exchange of equity. You can direct people to this blog that will keep them informed of the options they have and the way to use them. And you will have made a big service to yourself and to your community.

Roberto Mazzoni

P.S. The commercial real estate foreclosure wave is something we can deal with. Refer anybody you know might be in trouble or interested in becoming a solution provider to the MEETUP we are holding in Tampa on June 9.